FTX Bankruptcy Payout Plan: How and When Creditors Will Be Compensated

The collapse of FTX, once a leading cryptocurrency exchange, sent shockwaves through the digital asset landscape. As the dust settles, the focus has shifted to the FTX repayment process, a complex undertaking that has captured the attention of creditors, investors, and industry observers alike. The bankruptcy claims agent for FTX has been working tirelessly to develop a comprehensive FTX repayment plan, aiming to provide some relief to those affected by the exchange's downfall. This article delves into the intricate details of the FTX payout, exploring the timeline and compensation plan for creditors. 

Payout Speculations and Market Reactions

On September 29, reports regarding the payment of $16 billion to the creditors of the defunct cryptocurrency exchange, which were circulating on the social network X, caused the token rate of the insolvent exchange FTX (FTT) to increase by about 60%. At one time, FTT was up to about $3. Quotes during the afternoon on September 30 dipped into the $2 level.

Thousands of likes and hundreds of thousands of views have been received by posts about the fictitious asset allocation and the purported payments, which date back to September 30. On the dates and amounts of the payouts, there is, however, no concrete evidence.

The FTX exchange has not operated since the end of 2022, although its token is still traded on other cryptocurrency exchanges. Furthermore, FTT quotations are still responding to news or remarks regarding the closed exchange.

Asset Sales and Impact on Crypto Market

Some analysts predict that investors can allocate a portion of these funds back into cryptocurrencies, as the exchange will refund to consumers the comparable amount in dollars rather than сrypto. And this will thus positively affect certain of their quotations.

Such optimism, meanwhile, might not be grounded in reality. Redeeming $5.5 billion worth of "debt" by stakeholders who are not cryptocurrency investors, according to data provided by well-known FTX watcher Sunil Kavoori at X. This indicates that over half of the clients have already liquidated their claims against the exchange and have gotten assets from other sources; these parties will get the reimbursements from FTX.

Deposits made by FTX clients with claims of $1 million or more were said to be selling for $0.73 per dollar with specialist brokers at the beginning of 2024, but as of October 2024, they were about half that amount.

Creditors and Payout Structure

The bankruptcy plan states that 98% of FTX consumers with claims under $50,000 will get reimbursements equal to the value of their cryptocurrency holdings at the time of filing. So, for example, having 1 BTC on the balance before the close, the customer would receive the equivalent of roughly $16 thousand, but currently the price of one coin of the major cryptocurrency is over $65 thousand.

As on the day of FTX's bankruptcy filing, clients will thus get 118% of the claim amount in cryptocurrency. Using the $1 BTC example, it is predicted that, as opposed to receiving $64k as if they had just held Bitcoin on their balance, a user with a 1 BTC claim would get around $19k. It is also reported that $230 million will be distributed to investors who had shares in FTX before its bankruptcy from a separate pool established by the company's shareholders.

The current FTX liquidators ultimately gave up on their ambitions to reconstruct the exchange in January. In terms of the value of the surviving assets, which will aid in the recovery of client funds, the expansion of the cryptocurrency market in 2023 and 2024 worked to their benefit.

Conclusion

The FTX repayment process has a significant impact on the cryptocurrency landscape. This situation highlights the need for stronger safeguards and transparency in the crypto industry to protect investors and maintain market stability.

SimpleSwap reminds you that this article is provided for informational purposes only and does not provide investment advice. All purchases and cryptocurrency investments are your own responsibility.